S&P 500
1940.67
-29.40 -1.49%
Dow Indu
16659.79
-220.57 -1.31%
Nasdaq
4387.25
-75.65 -1.70%
Crude Oil
98.50
-1.77 -1.78%
Gold
1287.25
-7.98 -0.62%
Euro
1.338740
-0.000965 -0.07%
US Dollar
81.454
+0.054 +0.07%
Weak

Free Advice From Seth Klarman & Charlie Munger

By: Tim Melvin

It was Sir Isaac Newton who famously said, "If I have seen further than certain other men, it is by standing upon the shoulders of giants."

Those who came before us in life have left a huge treasure trove of knowledge, but it seems few ever take the time to study what those great minds have already learned.
Nowhere is this truer than in the markets, particularly when it comes to investing in the financial markets.

There have been some wildly successful investors who have been embarrassingly generous about sharing their secrets of making money, but almost no one takes the time to read the body of work.
The Legends And Their Myths

Most people know who some of these legends are but have never read the material. Most investors have heard of Benjamin Graham, but very few have ever read The Intelligent Investor, and even fewer have ever cracked the cover of Security Analysis. [Read more...]

Death of the Dollar? Gold an Inflation Hedge? Really?

Take a look around the gold bull landscape and tell me how many of them are featuring a chart like this, showing the US dollar in a bullish short-term stance (to go with the weekly bullish stance we have noted for so long in the ‘Currencies’ segment).

usd.daily

This is not to say that the US dollar has real value. How can it when it is hopelessly dragged down by a national debt-for-growth obsession. But as with gold, value is one thing and price is quite another. It is just that one (USD) receives a price bid due to a ‘nowhere else to hide’ sort of mentality by the majority when asset market liquidity becomes constrained and the other (Gold) receives a more solid value bid, over time.

We saw what happened when gold got the price bid as the panicked ‘Knee Jerks’ flooded in during the acute phase of the Euro crisis in 2011. That was the exclamation point on the first major phase of the gold bull market and the dawn of a cyclical bear market.

We continue to await economic contraction, in which the price of the USD can benefit for a while as capital comes out of assets and into what it thinks is a safe haven. Gold remember, has been soundly discredited as a store of value and that has been the bear market’s job… well done I might add. [Read more...]

The Truth About Amazon

When was the last time you bought something on Amazon.com (NASDAQ:AMZN)? For me, I purchased a pair of cycling gloves last week. It seems that when Amazon reported a wider than expected loss, investors were surprised and shocked. What were they expecting?

The reality is that Amazon is a juggernaut in online commerce and is seeking world domination in selling you stuff. The strategy that Jeff Bezos is using for Amazon is not new, Sam Walton in the 60s did the exact same thing with Wal-Mart Stores, Inc. (NYSE:WMT). Sam's idea was pretty simple, start with low prices so it puts your competitors out of business, then you can raise your prices afterwards. Amazon is doing the same thing, but online.

Just like Walmart, Amazon made it easy to buy something and return it if you don't like it, all with no hassles. Amazon is building something that is incredibly valuable - millions of consumers who want to buy products through them alone.

Just imagine, all Amazon has to do is raise prices just a little bit and they will be very profitable. Will consumers run the other way when this happens? No, as consumers we are so trained to buying at Amazon that a small price increase is not necessarily going to have buyers running.

Let's face it, we are all creatures of habit and I've gotten into the habit, like millions of other consumers, of just going to Amazon looking for an item and buying from them. Sure, if I searched around the web and spent a lot of time, I may save a dollar or two, but I would also be potentially doing business with companies I don't know. How reputable are they? Do I feel comfortable giving them my credit information and other private information? [Read more...]

Weekly Futures Recap With Mike Seery

We've asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.

Silver Futures

Silver futures in the September contract finished the week down about $.30 to close this Friday at 20.60 ending on a positive note up about $.18 closing right near session highs as the trend is now lower hitting a 4 week low so I’m neutral this market sitting on the sidelines waiting for another trend to develop, however if you are bearish I would sell at today’s price of 20.60 while placing my stop loss above the 10 day high which was on Monday’s trade at 21.32 risking around $.70 for $3,500 per contract as the chart structure currently is very solid. I’ve was recommending a long silver futures position when prices broke above 20.02 in late June while getting stopped out last week at the 10 day low as prices have broken down as the Malaysian airliner crisis has settled down as deflation currently is in the air not inflation as the U.S dollar continues to rally against the Euro currency as many of the commodity markets have been heading lower. Silver futures are trading below their 20 but still above their 100 day moving average telling you that trend currently is mixed and if you’re not looking to sell at today’s price level I would sit on the sidelines and trade another market that has a stronger trend.
TREND: MIXED
CHART STRUCTURE: SOLID

[Read more...]

A Basic Guide to Understanding Reversals and Breakouts

Traders who study their time frame charts religiously will learn how to pick out certain indicators that can help to forecast a trend. Identifying these indicators early will help you to get a jump start on entering and exiting a trade at just the right moment to maximize your profit.

Time Frames


A time frame chart is a simple method used by traders to get a clearer picture of the direction pairs are heading. You choose the length of time you want to study, say 2-hour increments for short term goals or 8-hour increments to study the long term trending of a pair. The chart will show you the averages during that time, smoothing out the variations to make it easier to see the important details you need to know.

Two of the tools that your moving averages will help you base trades off of are reversals and breakouts.

Spotting a Reversal

A reversal trade is knowing when a currency is going to make a sudden move in the opposite direction. [Read more...]

If Other Countries Sneeze, Will The U.S. Catch A Cold?

Just as the U.S. economy is strengthening, other countries are threatening to drag it down.

Employers in the U.S. are creating jobs at the fastest pace since the late 1990s and the economy finally looks ready to expand at a healthy rate. But sluggish growth in France, Italy, Russia, Brazil and China suggests that the old truism, "When the U.S. sneezes, the rest of the world catches a cold," may need to be flipped.

Maybe the rest of the world will sneeze this time, and the U.S. will get sick.

That's the view of David Levy, who oversees the Levy Forecast, a newsletter analyzing the economy that his family started in 1949 and one with an enviable record. Nearly a decade ago, the now 59-year-old economist warned that U.S. housing was a bubble set to burst and that the damage would push the country into a recession so severe the Federal Reserve would have no choice but to slash short-term borrowing rates to their lowest levels ever to stimulate the economy. That's exactly what happened. Now, Levy says the United States is likely to fall into a recession next year triggered by downturns in other countries, the first time in modern history.

"The recession for the rest of the world ... will be worse than the last one," says Levy, whose grandfather called the 1929 stock crash and whose father won praise over decades for anticipating turns in the business cycle, often against conventional wisdom. [Read more...]

5 Minimal Peter Cundill-Like Moves For Your Portfolio

By: Tim Melvin

Have you read the book There's Always Something to Do by Christopher Russo-Gill?

If not, it should move right to the top of your summer reading list. It is the accumulated reflections of Peter Cundill. A Canadian value investor, Cundill used the Graham Deep Value Approach to return a little more than 15 percent, on average annually, to investors for almost 30 years.

Cundill once described his approach as looking to buy dollars for $0.40, and he focused almost entirely on the balance sheet. He once commented that he did liquidation analysis and liquidation analysis only. He wanted to buy stocks in companies that traded below where he estimated they could be profitably liquidated.

1. Things To Do

Cundill looked all over the world for ideas, and felt that most of the time he could find enough bargain issues to get his funds invested in such bargain issues and provide above average returns. However, he was not afraid to hoard cash when he could not find enough true bargains to get fully invested.

Value investors today, however, find themselves facing a situation where it is very difficult to get fully invested, because of a lack of opportunities in the aftermath of a five-year rally in global equities. There are a few things to do, however, even in an overheated market.

The most obvious opportunity for those who favor a deep-value approach is the U.S. community banks. Many of these smaller banks face challenges that will push them toward the inevitable conclusion: they need to sell to a larger institution rather than go it alone. The avalanche of regulations is pressuring the bottom line as compliance costs spiral out of control and make it difficult to earn sufficient profits to justify independence.

2. A 'Perfect Storm' For Regional Banks

[Read more...]

Currencies, Gold And The Big Picture

Here are the monthly views of the basket cases we call major currencies.

Uncle Buck and his reserve status were leveraged to the hilt by "The Hero" and now his successor is trying to gently talk the Fed out of its policy stance over time.  In other words, tightening is going to come one way or another and Janet Yellen is trying to go the orderly route.  When this process becomes disorderly, the USD is likely to benefit from the liquidations elsewhere in the asset world.

Technically, USD is in a long basing pattern.  There are those who think it is basing before a renewed decline, reading a Symmetrical Triangle (continuation) pattern into poor old Unc.  I think the odds are it is bottoming over the post-2008 years when inflation – try as they might to have promoted it – simply has not taken root.  Leaning bullish, watch support and resistance.

usd

 

Long ago we projected a rally in Uncle Buck’s chief competitor, the Euro.  This was due to a bottoming pattern (formed on shorter term charts) and unsustainable negative hype about the Euro crisis.  The target was around 140 +/-, which is the top of the post-2008 downtrend channel.  Euro remains in a big picture downtrend and if global asset markets start to come unwound in the coming months, it is not Euros people are going to run to, I can tell you that.  Bearish below the upper trend line. [Read more...]

To Trade Successfully, You Must Trade With The Trend

In life, trends are all around us and you only have to look at the weather to know that’s true. It's a pretty safe bet that temperatures will be colder in December than they will be in August, at least in the Northern Hemisphere. Trends also persist in the marketplace, but unlike the weather, these are moving trends and change year to year. As a trader and investor, you want catch the trends near a top or bottom.

Learn more about trading the trend here.

Candlestick Patterns – Harami

If you follow our blog, then you are definitely familiar with trader Larry Levin, President of Trading Advantage LLC. We have gotten such a great response from some of his past posts that he has agreed to share one more of his favorite trading tips as a special treat to our viewers. Determining the direction of the market can be tricky and just plain confusing at times, but Larry’s expert opinion keeps it simple.

If you like this article, Larry’s also agreed to give you free access to his weekly trading tip.

I've already covered some of the better known patterns like Doji and Engulfing  – now it's time to add Harami to your candlestick chart pattern arsenal. Let's take a look at what this technical signal looks like, and what opportunities might be presenting themselves when you see it.

Harami patterns can be bearish or bullish

Harami, like engulfing patterns, are a two candlestick formation. They are actually often confused with engulfing patterns because they both involve candles where one real body is bigger than the other. The difference is that in harami, the preceding (or first) candle in the pattern is the longer one of the pair; it encompasses the whole body of the second candlestick. [Read more...]

© Copyright INO.com, Inc. All Rights Reserved.